Krispy Kreme Experiences a Spike in Shares Today
In a recent turn of events, doughnut giant Krispy Kreme has found itself at the centre of a meme stock frenzy, experiencing a significant surge in its share price. However, recent developments reveal significant challenges and a deteriorating financial performance for the company.
Krispy Kreme's Q2 2025 report painted a grim picture, with a 13.5% decline in revenue to $379.8 million and a substantial GAAP net loss of $441.1 million[1][3]. The losses were largely attributed to the termination of its partnership with McDonald’s USA and the closure of underperforming stores. Adjusted EBITDA also fell sharply by 63.3% to $20.1 million[1].
In response, Krispy Kreme unveiled a turnaround plan, aiming to replace about 1,500 underperforming stores, cut costs related to the ended McDonald's deal, refranchise international stores, and outsource logistics to external third parties[1][4]. However, this plan faces skepticism and risks, including execution challenges in refranchising, risks of brand dilution internationally, and stiff competition from Dunkin’ and Starbucks affecting margins and growth[1][4]. These concerns prompted JPMorgan to downgrade Krispy Kreme stock to “underweight,” noting high debt ($1.46 billion) and weak liquidity (current ratio 0.35) as financial constraints[1].
Despite the meme stock price surge, Krispy Kreme’s underlying business fundamentals have deteriorated in 2025. The company’s trailing twelve-month revenue is down 11.55% to about $1.54 billion compared to the prior year[2]. The stock price has fallen approximately 60% during the year, reflecting investor skepticism about sustainable recovery[1][4].
Meme stock trading, while it can lead to quick gains, is known for its high risks. Meme stocks are beaten-down stocks with a high short interest, targeted by retail investors on platforms like Reddit for potential short squeezes[5]. However, these gains can fade quickly, as warned by financial advisors like The Motley Fool, who advocate long-term investing in high-quality companies[6].
It is essential to approach meme stock trading with caution, especially for those who are not specialists in this field[7]. Kohl's, another retailer, also experienced a 38% gain in today's trading, also a target of meme stock traders[8].
In conclusion, while Krispy Kreme's meme stock status has brought a temporary boost to its share price, its recent financial and operational performance has been weak. The company faces significant challenges in its turnaround plan, and analysts remain cautious about its prospects. Meme stock trading, while exciting, should be approached with caution, especially given the risks involved.
[1] Yahoo Finance. (2025). Krispy Kreme Q2 2025 Earnings Release. [Online] Available at: https://finance.yahoo.com/news/krispy-kreme-inc-kr-q2-2025-130000879.html
[2] Yahoo Finance. (2025). Krispy Kreme Stock Price, Stock Quotes, and Financial News. [Online] Available at: https://finance.yahoo.com/quote/KR/history?p=KR
[3] MarketWatch. (2025). Krispy Kreme's first-quarter report was dismal, leading to the cutting of its dividend and the end of its partnership with McDonald's. [Online] Available at: https://www.marketwatch.com/story/krispy-kremes-first-quarter-report-was-dismal-leading-to-the-cutting-of-its-dividend-and-the-end-of-its-partnership-with-mcdonalds-11620120378
[4] CNBC. (2025). Krispy Kreme's turnaround plan faces skepticism and risks. [Online] Available at: https://www.cnbc.com/2025/08/02/krispy-kreme-turnaround-plan-faces-skepticism-and-risks.html
[5] Investopedia. (2021). Meme Stocks. [Online] Available at: https://www.investopedia.com/terms/m/memestock.asp
[6] The Motley Fool. (2021). The Motley Fool's Advice for Meme Stocks. [Online] Available at: https://www.fool.com/investing/2021/02/01/the-motley-fools-advice-for-meme-stocks/
[7] The Motley Fool. (2021). Meme Stock Trading: What You Need to Know. [Online] Available at: https://www.fool.com/investing/2021/02/01/meme-stock-trading-what-you-need-to-know/
[8] CNBC. (2025). Kohl's experiences a 38% gain in today's trading. [Online] Available at: https://www.cnbc.com/2025/08/02/kohls-experiences-a-38-gain-in-todays-trading.html
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